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**MNI 5 Things: US Core PCE Prices +0.2%; Y/Y Up To +1.6%>
--5 Things We Learned From February Personal Income Data
By Kevin Kastner, Holly Stokes, and Sara Haire
WASHINGTON (MNI) - The following are the key points from the
February personal income, spending, and price data released Thursday by
the Bureau of Economic Analysis:
- The data suggest inflation remains contained, but there were
modest upward movements to the year/year rates. However, core inflation,
income, and PCE were all on expectations, so the market reaction is
likely to be muted.
- The core PCE price index rose 0.2%, (+0.228% unrounded), as
expected, after a 0.3% gain (+0.288%) in January. The y/y rate ticked up
to 1.6% after holding at 1.5% in the previous four months. The rate is
the highest since April, but still well below the 1.9% rate in the same
month a year ago. The overall PCE price index also rose 0.2% after a
0.4% January gain, as energy prices fell by 0.1% in the current month.
The y/y rate rose to 1.8% after 1.7% gains in the last three months.
- The savings rate rose to 3.4%, its highest since August 2017, up
from 3.2% in January and 2.4% in December, but it remains well below the
4.1% rate a year ago. Some analysts note that the declines in the
savings rate over the last year have been key in supporting consumption,
as consumers are confident enough about the economy and the job market
to shift from saving to spending. However, an MNI analysis Wednesday
suggests that much of that spending is coming via credit cards rather
than excess cash.
- Personal income rose 0.4%, as expected, led by another solid
increase in wages and salaries and gains in proprietors' income, income
on assets, and rental income. Personal taxes rose 0.7% after a 3.2% drop
in January, so disposable personal income posted a more modest 0.4%
increase after a 1.0% jump in January.
- Current dollar PCE was up 0.2%, as expected. Real PCE was flat
after a 0.2% decline in January, so the first quarter average was up
only 0.6% at an annual rate from the fourth quarter. PCE was up 4.0% in
the fourth quarter GDP report.
** MNI Washington Bureau: 202-371-2121 **
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